The threat of an escalating trade war drove prices of Chinese soymeal higher.
China is considering retaliatory measures on U.S. agriculture and food products in response to tariffs from the Trump administration that are scheduled to take effect on Tuesday, according to the Global Times.
The response from Beijing will likely include tariffs and non-tariff measures, the Communist Party-backed news outlet reported on Monday, citing a person it didn’t identify. The Global Times, which didn’t provide specific details, is occasionally used to signal China’s positions to the outside world.
The threat of an escalating trade war drove prices of Chinese soymeal — used in food and animal feed — to close 2.6% higher on Monday, the most in more than three weeks. A disruption to U.S. soybean shipments could tighten the market further.
President Donald Trump has pledged to double the levy on China to 20%, while also hitting Canada and Mexico with broad tariffs on March 4. The Asian nation is the world’s biggest importer of soybeans, which are typically crushed into cooking oil and animal feed, particularly for the country’s large pig herd.
China’s soymeal market has tightened this year as commercial crushers avoided booking U.S. soybeans on trade concerns, while Chinese customs delayed the clearance of some cargoes as authorities seek to bolster the local industry.
Beijing imposed hefty tariffs on a list of U.S. farm products including soybeans during Trump’s first term as president in response to his levies, leading to sales of American soybeans to China plunging almost 80% over a two-year period. The Asian nation has since moved to buy more from Brazil.
Still, the U.S. remains a major source of grain for China including wheat and corn. On Friday, a spokesperson for the Chinese Ministry of Commerce said the nation will “counter with all necessary measures to defend its legitimate rights and interests” in response to the incoming tariffs.
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